Study: Flats Average $1,000 Per Meter

Real estate prices in Moscow have surpassed pre-crisis levels and an important psychological mark -- $1,000 per square meter -- according to a recent 2002 market report.

Even prices for one-room apartments, the least expensive segment of the market, have risen above $1,000 per square meter, according to the report from the real estate company RAN SAVA. High-priced three-room apartments already passed that mark back in September.

Prices, however, have yet to reach 1995-96 levels.

In December 2002, three-room apartments cost an average of $1,082 per square meter, while two rooms went for $1,073 and single rooms for $1,034. In December 1995, the average price was $1,217 per square meter -- $1,104 for one-room apartments, $1,147 for two rooms and $1,338 for three rooms.

Furthermore, prices are starting to even out in all segments of the market.

Even low-quality apartments in khrushchyovki -- flimsy buildings constructed in the 1950s and 1960s and named after Soviet leader Nikita Khrushchev -- are being offered for $949 per square meter.

Pricing is also becoming less dependent on location.

In the prestigious western part of Moscow, cheaper apartments are offered for $984 per square meter, while in the east they are priced at $919.

"Pricing differences in [non-elite] housing are eroding," said Sergei Yeliseyev, marketing director at Inkom-Nedvizhimost.

"New buildings, which were a lot cheaper than secondary-market apartments, are now the same price. The same can be said for categories of housing and location.

"A couple of years ago, you could sell a two-room apartment in Krylatskoye and easily exchange it for two one-rooms in Yuzhnoye Butovo. Today, that doesn't happen," he said.

Brick buildings -- including high-rises and Stalin-era buildings -- have led the market in price growth, according to RAN SAVA, increasing by 25 percent last year.

Not far behind are panel buildings and brick buildings with small kitchens, which both rose 20 percent, followed by khrushchyovki with 19 percent growth.

Grigory Poltorak, president of the Moscow Guild of Realtors, said that prices will remain high.

He compared the real estate market with the high-tech market: Computer prices have remained the same but quality has improved. The same goes for the Moscow real estate market.

Housing once considered elite is no longer so, and new buildings are of a higher quality than before, though price changes have been insignificant.

Some realtors disagree.

Konstantin Aprelev, head of RAN SAVA, said a price drop in some housing categories is likely in February and March.

The drop should be insignificant -- about 5 percent -- he said, but growth is expected to halt in most segments of the market.

Yeliseyev agreed.

Apartments will remain for sale longer and prices will change, he said. Buyers can already knock off $500 to $1,000 from the starting price, and soon this will become common practice.

"With this backdrop, the migration of economy-housing buyers to the Moscow region looks even clearer," he said.

Elite realtors are more optimistic.

The segment will grow by 40 percent to $1.4 billion in 2003, according to data from the Penny Lane real estate agency.

Prices in the city's more prestigious areas have already surpassed the $10,000-per-square-meter mark, and prices in the secondary market of class A housing are nearing $12,000 per square meter.